The S&P has filled its pre-market gap up and is continuing lower, remaining weak in the month of May. Indices were unable to get a strong bounce after some small overnight gains eased pressure on the market, and for now the outlook remains slightly bearish. That being said, we are very oversold at current levels and it is certainly not prudent to chase shorts down here. While we are still seeing selective strength in the market, it is much more sparse than we saw yesterday.
Netflix, Inc. (NFLX) has shown tremendous relative strength during May. The stock opened just above an important pivot high and initially sold off, but turned higher at just after 11am ET and looks to be gaining some momentum. NFLX long was Steve Levay’s Play of the Day on T3Live this morning. The next stop for NFLX is new highs above $255, which could come sooner rather than later if the market gets an uptick. Definitely a stock to watch and should see more upside from here.
The fertilizers have rested today after yesterday’s steep climb, boosted by several upgrades within the sector. Easily the strongest one among them is CF Industries Holdings, Inc. (CF), which broke a long-term downtrend yesterday and is holding up best today. PotashCorp./Saskatchewan (MOS), Agrium Inc. (AGU) and The Mosaic Company (MOS) are the catch-up plays.
A bullish commodity call from GS overnight and a dip in the dollar has boosted commodity stocks. The precious metals opened sharply higher and got a nice push off the open, while oil has been a bit weaker intraday.
Overall it’s been a quiet day, and will likely slow down even more as Memorial Day weekend approaches.
Disclosure: Scott Redler is long NFLX, YNDX, SLV, POT. Short SPY
By: John Darsie